why Prepaid Expense is treated as an asset & what will be
its journal entry using golden rules of accounting.
Answers were Sorted based on User's Feedback
Answer / h.r. sreepada bhagi
Amount paid in advance in an accounting period for a service
to be received in a future accounting period is Prepaid
Advance. Since payee owes money or moneys worth (service) as
on the date of Balance Sheet at the end of that accounting
period, it's an asset.
When payment is made for future expense in advance the
entry is to :-
Debit Prepaid Expenses A/c, and
Credit Bank or Cash A/c.
In the future accounting period to which the expenses
relates, the entry will be :-
Debit Expenses A/c, and
Credit Prepaid Expenses A/c.
Is This Answer Correct ? | 7 Yes | 2 No |
Answer / sanj
Prepaid expenses is the expenses paid in advance for the
next year.Currently we are accounting current profit and
losses. The services agaisnt this payment will be in next
year so payment of this should be counted in next year.
Is This Answer Correct ? | 2 Yes | 0 No |
Answer / govinda_mahato05
Prepaid expenses is the expenses for which we paid the money in advance for that expense. But actually this expenses will not have occurred at the time of payment. However this prepaid expenses adjust at the time of happening this expenses in actual.
Is This Answer Correct ? | 0 Yes | 0 No |
Answer / shamim
because this exp has to pay in advance but did not get
service from whom pay the money thats y it is current asset
Exp a/c dr
prepaid exp. a/c
Is This Answer Correct ? | 4 Yes | 7 No |
Hi.. I am pursuing my MBA II year thrgh distance frm O.U HYD., Pls let me know any jobs...in Bank jobssssss
Explain what is gaap?
how to read balance sheet ? and at first which thing you see in balance sheet ?
Any income which is earned in the financial year(2009-10) but received in the assessment year(2010-11) wil be taxable or not?
What is the difference between Issue & Sell / sale?
goods with drawn by proprietor for household expenses
What is Account receivable & Account payable ?
Is bank charges in accounting a direct expenses or indirect expenses
WHAT IS TAX ? WHY SHOULD PAY TAX?WHAT IS THE NEED FOR PAYING TAX?
in accounting process there is summerizing. what is sumarizing? and an relevant example of summarizing?
How do you prepare mis reports?
What is fractional code and how can i get a fractional code for a particular account?